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Finance Minister Sadakazu Tanigaki and U.S. Treasury Secretary John Snow agreed Friday that stubbornly high oil prices pose a risk for the global economy, Japanese officials said.

Their assessment came during a meeting just before the start of a two-day gathering in Washington of the Group of Seven financial ministers, the officials told reporters.

Tanigaki said a spike in crude oil prices is a risk for the Japanese economy. In reply, Snow said high oil prices are also a risk for the global economy, including the U.S., the officials said.

The two leaders briefly discussed China’s currency reform, the officials said, adding Snow raised the issue and referred to the need for flexibility in China’s currency system.

Tanigaki told Snow that China has already studied various measures on its own and that he hopes Beijing will handle the matter appropriately.

The U.S. has pressed China to adopt a flexible currency system, saying the current dollar-pegged currency regime makes the yuan undervalued and gives Chinese products an unfair advantage in the global market.

China has pegged its currency in a tight range of around 8.28 yuan to the dollar. China said it will reform the currency system at some point but has yet to provide a timetable.

During the talks, Snow pledged to intensify efforts for fiscal reforms, including pensions and taxes, and Tanigaki praised the move, the officials said.

Snow also said the U.S. needs to push ahead with medical reform, they said.

Asked about the biggest achievement of the talks, Tanigaki told reporters after the meeting, “I think it is that the United States expressed its resolve to seriously tackle the fiscal structural problem.”

Snow also reiterated his pledge to halve the U.S. fiscal deficit by fiscal 2009 and Tanigaki welcomed the move, saying steady growth in the U.S. economy will be good for the world economy.

Tanigaki briefed Snow about the Japanese economic situation, saying a recovery in the world’s second-largest economy is still at a pause and deflation remains a problem.

At the same time, he stressed the bright side of the economy, citing strong corporate profits and recent signs of improvement in employment conditions and income.

Tanigaki also told Snow about the smooth introduction of the new deposit insurance system on April 1 and progress in reducing bad loans in the banking sector.

Snow did not raise other key issues for Japan, such as promoting further deregulation, creating a level playing field for U.S. insurers after the planned privatization of postal services and the lifting of the import ban on U.S. beef, according to the officials.

It was their first meeting since October, when they met on the sidelines of a G-7 meeting in Washington. Snow skipped the last G-7 meeting in London due to a cold.

The G-7 groups Britain, Canada, France, Germany, Italy, Japan and the U.S.

IMF chief pushes Japan

WASHINGTON (Kyodo) Japan should press for structural reforms to attain sustainable medium-term economic growth, while continuing its ultra-easy monetary policy to defeat deflation, the head of the International Monetary Fund said Friday.

“In Japan . . . the quantitative easing policy should remain in place until deflation is firmly beaten,” IMF Managing Director Rodrigo de Rato said in a statement for the fund’s semiannual policy-setting International Monetary and Financial Committee meeting on Saturday.

De Rato said Japan should also continue “structural reforms to boost growth and domestic demand” to “foster sustained medium-term growth.”

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